When the Chancellor sat down after delivering his Autumn Statement it left us acknowledging that Benjamin Franklin’s certainty on tax was now that we would all be paying more, and for a long time.
For well-paid individuals there is a reduction in the threshold over which tax at 45% is paid from £150,000 to £125,140, increasing the amount of tax payable by £1,200 per year.
Most of the current personal tax thresholds for income tax, national insurance, and inheritance tax are locked in until April 2028; “the big freeze”. With current levels of wage inflation this will bring more taxpayers into higher rates of tax over the next 5 or 6 years.
There are reductions in the Capital Gains Tax Annual Exempt amount from the current £12,300 to £6,000 from April 2023 and to £3,000 from April 2024 whereas for the Dividend Allowance the reduction is from £2,000 currently to £1,000 from April 2023 and to £500 from April 2024.
With the increasing popularity of electric vehicles, the Government will introduce Vehicle Excise Duty on electric cars, vans and motorcycles from April 2025. There will also be increases in the benefit in kind charge for such cars each year from April 2025/26 to 2027/28.
For businesses the threshold for secondary national insurance contributions will be held at £9,100 until April 2028, and the Employment Allowance is being maintained. Also being maintained at its current level is the VAT registration threshold, in this case for two years from April 2024.
The Government’s concern about fraud within Research & Development tax reliefs is leading to a reduction from April 2023 in the additional deduction rate for small and medium sized enterprises from 130% to 86% and a decrease in their credit rate to 10%. For large businesses the relevant rate will increase to 20%, perhaps paving the way for a future single R&D scheme. On the subject of fraud there is further funding for HMRC to tackle tax avoidance, evasion, and wider non-compliance.
The Stamp Duty Land Tax cuts introduced on 23 September 2022 as part of the Growth Plan will be retained until 31 March 2025.
When combined with measures that had previously been announced, there will be much for businesses and individuals to think about and plan for.